Rising ATF prices has trickled in the form of a 10% rise in the basic fares of full service airlines. This may not have a major impact on the total fare, since these form only a small component of the total fare.
For instance, a Kingfisher flight from Mumbai to Delhi has a tag of Rs 3000, while the other charges contribute Rs 3475. In such a case, a price rise of Rs 300 over the the total of Rs 6475 will only be Rs 4.63%. This hike is not expected to affect demand, especially in case of premium carriers. The difference in Rupee terms will only be smaller with low cost airlines.
But this hike will only encourage advance booking for the low cost travelers, since the flight charges are only getting higher. Sometime back, I saw the news that spicejet flights are booked till October, and this was a cause of worry for Kingfisher that was planning to a take a spicy stake. Though the international crude prices are now seeing a downhill post Bernanke’s speech; neither has the rise of inflation stopped, nor has the spot prices come down.
What happens to the common man? This is where Laloo smiles. His trains are seeing an ever increasing booking. In the present juncture, even the online booking service isn’t as efficient as it was before. It only means that rising population is a still a cause of worry for India, event though we are the preferred investment destination in the world stage.